Occidental Petroleum’s earnings
Occidental Petroleum (OXY) is scheduled to announce its first-quarter results on May 6. Analysts expect the company’s core earnings per diluted share to fall ~41% sequentially in the first quarter. Analysts expect ConocoPhillips (COP) and Apache’s (APA) earnings to fall 24% and ~52% sequentially, respectively.
Sign up for Bagels & Stox, our witty take on the top market and investment news, straight to your inbox! Whether you’re a serious investor or just want to be informed, Bagels & Stox will be your favorite email.
What changed in the last quarter?
Although lower oil prices could drag Occidental Petroleum’s earnings, the contraction in the Cushing-Midland WTI spread is a positive development for the company’s financials going forward. In the first quarter, the Cushing-Midland WTI spread averaged $1.20—compared to $6.26 in the fourth quarter of 2018. New pipeline additions and enhancing the pipeline infrastructure this year could lower the spread. The oil production in the Permian Basin accounts for 39% of the company’s total production.
Occidental Petroleum’s production is comprised of ~58.6% and ~15.6% oil and natural gas liquids, respectively, while the rest is natural gas. However, natural gas prices at the Waha Hub turned negative a few times in the last quarter. Drillers would have to pay to remove the natural gas glut without getting anything in return. Waha Hub natural gas prices are important to Permian Basin producers, which might have impacted the sharp fall in the earnings.
The discount between Midland and Magellan East Houston WTI fell ~40% sequentially in the last quarter, which could also impact Occidental Petroleum’s midstream earnings. In the fourth quarter of 2018, the discount fell ~32.8% sequentially. Occidental Petroleum’s midstream revenues fell 5.1% on a sequential basis.
On April 24, several semiconductor stocks made new 52-week highs.
Broadcom (AVGO) stock fell ~8.5% after markets closed yesterday following the semiconductor giant's fiscal 2019 second-quarter earnings release. It missed analysts' revenue estimate and cut its fiscal 2019 revenue guidance by $2 billion to $22.5 billion due to sluggishness in its semiconductor solutions business.
The SPDR Gold Shares ETF (GLD), which tracks physical gold prices, has underperformed the broader markets year-to-date, rising just 4.4% compared to the S&P 500’s (SPY) gain of 15.9% as of June 14. The sentiment for gold, however, has been turning around.
Safe havens such as Treasuries and gold were back in favor on June 14 as stocks fell due to rising tensions in the Middle East, concerns over growth, and the looming threat of the US-China trade war. The tech-heavy Nasdaq Composite Index fell 0.67% in the first hour of trading.
Lululemon (LULU) stock rose 2.1% on June 13 in reaction to better-than-expected first-quarter results and an upgraded outlook for fiscal 2019 overall. The company's first-quarter adjusted EPS grew 34.5% to $0.74 on revenue growth of 20.4% to $782.32 million. Analysts had expected EPS of $0.70 and revenue of $755.31 million. Here's why the outlook got an upgrade.
As of 4:40 AM Eastern Time today, US crude oil active futures were at $51.83, ~4% below their closing level in the previous week. If US crude oil prices stay at those levels today, they'll mark their third week of decline in five weeks.
Amazon is discontinuing its Amazon Restaurants service, which has been delivering food for restaurants in parts of the United States. Amazon Restaurants launched in the United States in 2015 and entered the British market the following year. However, it met strong opposition in the British market.